Sky Pay-TV Freeview Plan Delayed

British media regulator Ofcom announced today that it was delaying a decision on a planned Sky pay-TV service for Freeview until a larger investigation into the entire pay-TV market can be completed later this summer. The announcement makes a full decision on the Sky service unlikely before 2009.

Sky announced its plans for the pay-TV offering, called Picnic, in February 2007. The plan calls for Sky to replace its three channels currently on Freeview with a subscriber-only service of six channels (four from Sky, two from third parties) sharing time on three streams. One of the six channels would be Sky Sports 1, meaning subscribers would have access to Sky’s lineup of 92 Premier League matches a season. Sky had hoped to launch Picnic before rival Setanta Sports, and their lineup of 46 Premier League matches per season, launched their channel on the Top Up TV pay Freeview service.

Freeview, launched in 2002, is a free digital TV service offered by a consortium of British broadcasters. It currently reaches 15 million households across Britain, 6 million more than Sky’s satellite offering.

Sky’s Picnic now finds itself becoming a part of the larger fight on pay-TV in Britain as a whole. In March of last year, cable provider Virgin Media accused Sky of unfair pricing practices and abusing its dominant position in the market. Setanta Sports, broadband television provider BT, and Top Up TV has since joined Virgin in its criticism of Sky. Today’s ruling means the two investigations into Picnic and Virgin’s complaints will now be combined.

What does today’s delay mean? It means Setanta, which is adding FA Cup and England national matches alongside the Premier League this fall, will have at least a two year headstart on Sky for Freeview customers. And while Sky maintains an advantage in terms of sports subscribers at present, Setanta can continue to try and make progress on a major platform not available to their rival. It also means that, for the moment, Virgin’s complaints has found some resonance with British regulators, which could mean future trouble for Sky and its plan to expand into more British households.